87(R) SB 153 - Enrolled version - Bill Text

	S.B.  No.  153

	AN ACT
	relating to the exclusion of certain payment processing services
	from the definition of "data processing service" for purposes of
	sales and use taxes.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION  1.    Section 151.0035, Tax Code, is amended to read as
	follows:
	Sec.  151.0035.    "DATA PROCESSING SERVICE". (a) "Data
	processing service" includes:
	(1)    word processing, data entry, data retrieval, data
	search, information compilation, payroll and business accounting
	data production, and other computerized data and information
	storage or manipulation;
	(2)    the performance of a totalisator service with the
	use of computational equipment required by Subtitle A-1, Title 13,
	Occupations Code (Texas Racing Act); and
	(3)    [, and other computerized data and information
	storage or manipulation. "Data processing service" also includes]
	the use of a computer or computer time for data processing whether
	the processing is performed by the provider of the computer or
	computer time or by the purchaser or other beneficiary of the
	service.
	(b)    "Data processing service" does not include:
	(1)    the transcription of medical dictation by a
	medical transcriptionist;
	(2)    services exclusively to encrypt electronic
	payment information for acceptance onto a payment card network
	described by Subdivision (3)(E) to comply with standards set by the
	Payment Card Industry Security Standards Council; or
	(3)    settling of an electronic payment transaction by:
	(A)    a downstream payment processor or point of
	sale payment processor that routes electronic payment information
	to an entity described by Paragraph (C) or (E);
	(B)    a person who is engaged in the business of
	money transmission and required to obtain a license under Section
	151.302(a), Finance Code;
	(C)    a federally insured financial institution,
	as defined by Section 201.101, Finance Code, that is organized
	under the laws of this state, another state, or the United States,
	or an affiliate of the institution;
	(D)    a person who has entered into a sponsorship
	agreement with an entity described by Paragraph (C) for the purpose
	of settling that entity's electronic payment transactions through a
	payment card network; or
	(E)    a payment card network that allows a person
	to accept a specific brand of debit or credit card by routing
	information and data to settle an electronic payment transaction.
	(c)    For purposes of Subsection (b)(3):
	(1)    "Downstream payment processor" means a person
	described by 7 T.A.C. Section 33.4(c), as that provision existed on
	January 1, 2021.
	(2)    "Point of sale payment processor" means a person
	described by 7 T.A.C. Section 33.4(d), as that provision existed on
	January 1, 2021.
	(3)    "Settling of an electronic payment transaction"
	means the authorization, clearing, or funding of a payment made by
	credit card, debit card, gift card, stored value card, electronic
	check, virtual currency, loyalty program currency such as points or
	miles, or a similar method.  The term does not include charges by a
	marketplace provider, as that term is defined by Section 151.0242.
	(d)    "Data storage," as used in this section, does not
	include a classified advertisement, banner advertisement, vertical
	advertisement, or link when the item is displayed on an Internet
	website owned by another person.
	SECTION  2.    The changes in law made by this Act do not affect
	tax liability accruing before the effective date of this Act.  That
	liability continues in effect as if this Act had not been enacted,
	and the former law is continued in effect for the collection of
	taxes due and for civil and criminal enforcement of the liability
	for those taxes.
	SECTION  3.    This Act takes effect October 1, 2021.
	______________________________	______________________________
	President of the Senate	Speaker of the House